2013 (2) TMI 882 - HC - Companies Law

Summary

Issues involved:
The issues involved in this case include the rejection of an application by the Registrar of Companies under the Simplified Exit Scheme 2005, initiation of criminal proceedings against the Company and its Directors, and the challenge against the orders passed by the Registrar and complaints filed under the Companies Act.

Rejection of Application under Simplified Exit Scheme 2005:
The Company, facing financial difficulties, applied for striking off its name under the Simplified Exit Scheme 2005. However, the Registrar of Companies rejected the application without conducting an inquiry, citing complaints from former shareholders. The petitioners challenged this rejection, arguing that the Registrar did not follow the procedural requirements of Section 560 of the Companies Act. The counsel relied on legal precedents to support the claim that the rejection without affording an opportunity for the petitioners to substantiate their case was improper. The petitioners contended that criminal proceedings initiated against the Company while the application was pending should be quashed. The Additional Solicitor General, representing the respondents, defended the rejection of the application and the criminal complaints, stating that the Company did not meet the criteria for striking off its name under the Scheme.

Legal Precedents and Procedural Compliance:
The petitioners argued that the Registrar's order rejecting the application was challengeable under the extraordinary jurisdiction of the court due to non-compliance with Section 560 of the Companies Act. They emphasized that the criminal proceedings initiated against the Company were premature as the application for striking off the name was pending. The respondents maintained that the rejection was justified based on the circumstances of the case and the complaints against the Company. The court noted that the petitioners failed to demonstrate the relevant factors considered in such applications, especially regarding the rights of secured creditors.

Dismissal of Writ Petition and Criminal Complaints:
After considering the arguments presented, the court found no merit in the Writ Petition challenging the rejection of the application and the criminal complaints against the Company and its officers. The court emphasized that any defenses against the prosecution could be raised before the Magistrate. Consequently, both the Writ Petition and the Criminal Miscellaneous Case were dismissed.